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10.31 pm

Mr. Mark Fisher (Stoke-on-Trent, Central) (Lab) rose—

Mr. Deputy Speaker (Sir Michael Lord): Does the hon. Gentleman wish to speak?

Mr. Fisher: I should like the opportunity to make one or two remarks, which I have discussed with my hon. Friend the Member for Stoke-on-Trent, North (Ms Walley).

Mr. Deputy Speaker: Has the hon. Lady finished her speech?

Ms Walley: Yes.

Mr. Deputy Speaker: Does the hon. Member for Stoke-on-Trent, Central (Mr. Fisher) have the hon. Lady's permission to take part in the debate?

Ms Walley: He does indeed.

Mr. Deputy Speaker: Does the hon. Gentleman have the Minister's sanction?

The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen Timms): Yes.

Mr. Fisher: I am most grateful, Mr. Deputy Speaker, to you, to my hon. Friend the Member for Stoke-on-Trent, North for her kindness in giving me a moment or two, and to the Minister. I congratulate my hon. Friend on her resourcefulness in securing a debate that is important and urgent for everyone in north Staffordshire.

Now that the Minister has heard last week's debate and my hon. Friend's excellent speech tonight, I hope that he will think again about the disparity that is apparent between the theory of closures and what is happening in practice. In theory, they are an orderly reduction of the post office network in response to falling demand. In practice, they are an incoherent butchery of a public service that will leave some areas, particularly two large wards of almost 20,000 people in my constituency, without a single post office. Closures work in response to applications from post offices, and if each is vulnerable, there is no provision at all in some areas.

I hope that the Minister will think on that. I know that he cares enormously about post offices, but the way that closures are happening will leave not a smaller, coherent network, but a patchy one, and in those areas where the patches do not meet up, a disastrously inadequate service.

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10.33 pm

The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen Timms): I, too, congratulate my hon. Friend the Member for Stoke-on-Trent, North (Ms Walley) on securing the debate and on the way in which she has presented her case. She described issues affecting the post office network that are relevant to all Members. I welcome the opportunity to respond to those points.

I assure my hon. Friends the Members for Stoke-on-Trent, North and for Stoke-on-Trent, Central (Mr. Fisher) that I have taken serious note of their concerns, which my hon. Friend the Member for Stoke-on-Trent, Central also raised in last week's Opposition day debate. Both my hon. Friends have also, in discussion and in correspondence with me, told me about their experience of the consultation process for the programme. I shall hold urgent discussions with the chief executive of Post Office Ltd. and the chairman of Postwatch about how we can ensure that there is greater confidence than has been expressed in debates of late that the public consultation is meaningful and local views are properly considered before final decisions are made.

I am pleased to be able to tell the House that in the light of the concerns expressed by my two hon. Friends, Post Office Ltd. has agreed to extend the consultation period for the three Stoke-on-Trent city constituencies by two weeks until 3 February.

Again, I affirm the importance that I attach to the network of local post offices as a focal point for their communities in urban as well as rural areas, especially for elderly and less mobile people. We are committed to maintaining a viable nationwide network of post offices and ensuring that benefit recipients can continue to collect their entitlement in cash each week from their local post office by means of a Post Office card account or a bank account.

The starting point for our policy for the network is the performance and innovation unit's 2000 report, "Modernising the Post Office Network". It rightly pointed out that the network of post offices had not kept pace with the changing needs of its customers. Too often, post offices had become dingy and shabby through lack of investment and the Post Office had not made the most of its highly trusted status as a provider of financial services. The report was widely welcomed, in the House and elsewhere, as squaring up honestly to the challenges to the network. It made 24 recommendations, all of which we accepted.

The post office network has been contracting since the 1960s. Reductions in post office usage have occurred for all sorts of reasons. Past absence of investment is important, but dramatic improvements in technology, greater mobility and changes in shopping and financial habits mean that people simply do not use post offices as much. My hon. Friend the Member for Stoke-on-Trent, North rightly made the point, "Use it or lose it." That applies to many post offices.

The company was slow to develop new sources of income before the beginning of the switch last April by the Department for Work and Pensions to making all

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benefit payments by direct credit. More than 43 per cent. of benefit recipients already had their cash paid directly into their bank accounts rather than through order books, compared with only 26 per cent. in 1996. There are far fewer recipients of jobseeker's allowance now than a few years ago. Those changes pose big challenges to the network of post offices and they must be tackled, not ducked.

In the past financial year, Post Office Ltd. lost £194 million before exceptional items. This year it has reported a loss of £91 million for its first half year. Declining profitability in the network means that sub-postmasters' ability to sell on their businesses—the way in which people moved on in the past—has taken a severe knock. Decisive action is essential to maintain the sustainable country-wide network that we all want. We are taking such action.

One PIU recommendation was that if the Post Office decided that fewer offices were needed in some urban areas, the Government should consider providing funding to compensate affected sub-postmasters adequately for the loss of their business. That is right, and it is why, after parliamentary approval of the funding, Post Office Ltd began its urban network reinvention programme in November 2002.

To minimise the possibility of damaging and unco-ordinated closures, initial closure proposals in the programme focused on single post offices that were known to be most at risk through poor viability. In response to comments from hon. Members and others and to reduce uncertainty about the future shape of the network, the company moved to producing its proposals on an area-by-area basis, using each parliamentary constituency as the framework.

The area-wide plan gives the Post Office an opportunity to discuss with hon. Members and others the future shape of the network. It gives sub-postmasters confidence, and most people accept that an area-wide picture should help in our discussions about the future. The company aims to complete all public consultations by next December. That will also help to reduce uncertainty.

Ms Walley: Does my hon. Friend agree that when a desert could be left by the closure plan, the Post Office should consider carefully proposals from, for example, other retail outlets, where new post offices could be introduced, even alongside a closure programme?

Mr. Timms: We have made it clear that at the end of the programme, at least 95 per cent. of urban residents should be not more than a mile from their nearest post office. If there is an area larger than that, in which a large number of people would be more than a mile from their nearest post office, the Post Office should consider the possibility of opening a new outlet—indeed, I can think of a number of cases in which that has happened—perhaps within a larger retail outlet. I certainly welcome that.

In the debate last week, we talked about the crucial role of Postwatch in these discussions. Postwatch's assessment of the proposals relating to Stoke-on-Trent

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is not yet complete, but I understand that the organisation has some concerns about two of the proposed closures in Stoke-on-Trent, Central. It differs from the Post Office in seeing Trent Vale as a reasonably well presented post office. Also, although there is another branch less than a mile away at Hanford, there is a large road in between them. Postwatch has suggested that if Trent Vale were not retained, there would be a strong case for Oak Hill in Stoke-on-Trent, South. Postwatch is also concerned that the Penkhull branch was given as the receiving branch when the Allotments branch was closed under the programme last May. Postwatch is continuing to reflect on those matters, but I find it difficult to see how the closure of an office that everyone was told would be a receiving office only a few months ago can now be justified.

Following those proposals, and the decision that will be reached in due course—and given the additional two weeks' consultation that I mentioned—Post Office Ltd. has no intention of returning to the area with any further proposals for closures under the programme. The company believes that the proposed changes to the network across Stoke-on-Trent will fulfil its objective of providing the right level of service for the level of custom in the area.

An additional element of the programme is the £30 million that the Government have provided for modernising and adapting the offices that remain in the network. The key to improving standards in those offices will be the increased volume of business that they can expect, but the grants of up to £10,000—and in exceptional circumstances, up to £20,000—for each office that expects to take on a significant number of additional customers, to be matched by the same sum from the sub-postmaster, will be an important boost to achieving the bigger, brighter, better post offices that my hon. Friend rightly referred to.

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